Impact of Framing Bias on Investors and Venture Capitalists

Abstract

ABSTRACT The research paper explores the impact of framing bias which entails companies framing information and the resulting disposition effect on investors and venture capitalists. The study also examines the interaction between the disposition effect and framing information on the financial investment choices made by investors and venture capitalists by forecasting market stock prices. The study’s primary target audience is individual investors and venture capitalists who wish to be listed as investors in stock and securities corporations. This theoretical research aims to determine the impact of framing bias on venture capitalists and investors. Firstly, the conceptual analysis of the various theories in behavioral finance reveals that framing information by a company greatly influences the investment behavior of investors and venture capitalists in making their economic investment decisions. Moreover, the study also indicates that information obtained by investors and venture capitalists leads to the optimum disposition effect, influenced by the framed data received. Based on these findings, investors and venture capitalists who receive positively prepared financial data significantly forecast market stock prices than investors and venture capitalists presented with misleading framed data. Keywords: Framing bias; Investors; Venture capitalists; Disposition effect